Capacity is increasing across the range of private insurance-linked securities (ILS) products, as fund managers and reinsurers have benefited from new inflows to structures and investors look to access the strong reinsurance market returns that are available, rating agency AM Best has said.
But a single year of stellar returns, such as was seen across catastrophe bond and ILS strategies in 2023, is not seen as enough to drive a significant wave of new capital into the sector, AM Best believes.
As we reported last week, the latest data from AM Best and reinsurance broker Guy Carpenter estimates that alternative capital in reinsurance, so ILS, cat bonds and other third-party capitalised structures, could reach as high as $110 billion by the end of this year.
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